ENRC Founders Win 21-Day Extension on Deadline for Takeover Bid

June 3 (Bloomberg) -- Eurasian Natural Resources Corp.’s
three founders, leading a group seeking to take the Kazakh miner
private, received a three-week extension to today’s deadline to
make a bid for the company.

The U.K. Takeover Panel agreed to give the group of buyers
until June 24, an independent committee set up by ENRC’s board
said in a statement.

The committee asked for the extension after it received
“written assurances from the Consortium that it has made
considerable progress towards making” an offer for ENRC, it
said. The committee requested the extension with the expectation
that any revised offer will take into account its view that the
initial proposal was too low, the statement shows.

Alexander Machkevitch, Patokh Chodiev, Alijan Ibragimov and
the Kazakh government, together holding 54 percent, sent a
letter to the committee in May detailing an offer at 175 pence
in cash plus 0.231 shares of 26 percent-holder Kazakhmys Plc.
That’s equivalent to 260 pence a share based on a 370-pence
Kazakhmys price, the committee said May 20, concluding that the
offer “materially undervalues” ENRC.

The founders of the iron-ore and ferroalloys producer are
seeking to take the company off the market five years after it
sold shares in an initial offering for 540 pence each in London.
ENRC has lost about 43 percent in value in a year as it fights
corruption allegations relating to its operations in Kazakhstan
and Africa.

Fraud Investigation

The U.K.’s Serious Fraud Office said April 25 it began an
investigation into alleged fraud and bribery at London-based
ENRC operations, including in the Democratic Republic of Congo.

The founders are raising $1.6 billion to fund the cash
component of the buyout, and the government is offering its 26
percent stake in London-based Kazakhmys Plc, people familiar
with the matter said last month, asking not to be identified
because the information isn’t public.

The bidding group last week asked ENRC’s independent
committee for a minimum three-week extension to the existing
deadline of 5 p.m. on June 3 to formalize the initial proposal
or to drop the plan, two people with knowledge of the matter,
asking not to be identified, said on June 1. While legal
complexities around forming the bidding group have delayed the
proposal, there’s no issue around funding, one of the people
said.

ENRC gained 1.8 percent to 244.3 pence by the close in
London, valuing the company at about $4.83 billion.

Kazakhmys said the extension should provide time for
discussions to continue and allow the bidders group to forward a
formal proposal.

“This is a complicated situation, given the current
difficulties ENRC is experiencing,” Kazakhmys Chairman Simon
Heale said in a statement. “Should a proposal be tabled, the
board of Kazakhmys will remain focused on the best interests of
all its shareholders having regard to all relevant factors.”